Callum McCaig (Aberdeen South) (SNP):
Production increased in the North sea last year, which is welcome news at a time when most news for the industry is relatively bleak. Does the Secretary of State agree that the industry is at a point where it requires sustained support from this Government, which will require fiscal measures from her Chancellor in the coming Budget?

Amber Rudd:
The hon. Gentleman is, of course, absolutely right to say that great progress has been made in reducing the cost of production already, and part of the intention of this Bill is to make sure that we can deliver further on that. I share his view that we need to give as much support as possible, but it is too early for me to comment now on whether the Treasury will be able to give that support. I know that this Government are committed to making sure that we continue to support those jobs and the industry.

Geraint Davies:
Does the Secretary of State accept that the reason we have the massive deflation in oil prices, other than Saudi over-consumption, is fracking? The latest evidence shows that 5% of methane from fracking goes into the atmosphere, and methane is 83% worse than carbon dioxide in effecting climate change. Will she therefore hold negotiations with the United States about reducing this methane emission and put the brakes on fracking, so that we can actually lift the price of oil and have a more sustainable future?

Amber Rudd:
I make two points to the hon. Gentleman. First, the reasons for the fall in the oil price are multiple and complex. I will not analyse them here now, but there is not, as he suggests, just one cause. Secondly, the US has considerably reduced its emissions because of fracking, which of course we welcome.

Any oil and gas demand that we do not meet ourselves through domestic production has to be met by imports, at significant extra cost to the economy. Industry and government share the same ambitions and are working closely together to manage the remaining resources effectively and efficiently. As we progressively decarbonise our economy, we will continue to need oil and gas for many decades to come. It is far better that the jobs and revenue are in the UK, offsetting imports where we can. Maximising economic recovery from the UK continental shelf must be part of a balanced plan for a diverse and progressively lower-carbon mix.

This Bill will complete the work started in the previous Parliament to implement fully the Wood review. Key to Sir lan’s recommendations is the establishment of the Oil and Gas Authority as an independent regulator with a clear and focused mandate to maximise economic recovery of UK petroleum. Clauses 1 to 76 formally establish the OGA as an independent regulator and steward, which would take the form of a Government-owned company, transferring regulatory powers and functions to the OGA, and giving it new powers to support maximising economic recovery.

The OGA will take forward the principle of maximising economic recovery, set out in Part 1A of the Petroleum Act 1998, with powers taken in the Infrastructure Act 2015. In November, I launched a consultation on the strategy for maximising economic recovery of offshore UK petroleum, which is central to the OGA’s future effectiveness. An amendment made in the other place, which we will

18 Jan 2016 : Column 1154

try to overturn, seeks to broaden the principal objective, greatly expanding the scope of the OGA’s role and going far beyond the vision set out in the Wood review. In our view, and indeed in the view of the industry and the unions, diluting the focus of the OGA at this critical time is not the right way to proceed. The OGA should be focusing on maximising economic recovery, as that is what it has been set up to achieve. In the current difficult and challenging circumstances, nothing should distract from that vital task.

The OGA requires clarity on its objectives, and we intend to provide that. This Government are committed to the Climate Change Act 2008, and to our target to reduce emissions by 80% by 2050. We will see the Climate Change Act framework in practice this year when we set in law the fifth carbon budget. Amendments made in the other place seek to change how we count carbon for carbon budget purposes from the fifth budget onwards. Given that the work to set the fifth carbon budget is well underway, and has been for nearly a year, and although it is right to keep our accounting practices under review, now is not the right time to change. To do so now, this far into the process, would threaten serious delay. Therefore, we will seek to overturn those amendments.

Let me turn now to the delivery of the Government’s manifesto commitments to end new subsidies for onshore wind and to ensure that local people have the final say on where onshore wind is built. On 18 June, I set out to the House our intention to close the renewables obligation for new onshore wind in Great Britain from 1 April 2016, with a grace period available to those projects which, as of 18 June 2015, already have planning consent, an offer of grid connection and access to land rights. The provisions we made in the Energy Bill to achieve that were removed in the other place, and will be reintroduced.

There is no ambiguity on this matter, as it is a manifesto commitment. We signalled our thinking on ending new public subsidies for onshore wind long before the last election and put it before the British people in black and white. There are long-established and well understood conventions with regard to manifesto commitments and we will stand firm on them.

Onshore wind has deployed successfully to date and is projected to meet the planned range of 11-13GW by 2020. Without action, there is a risk of deploying beyond this range, potentially adding more costs to consumer bills and squeezing out opportunities for other renewables, such as offshore wind, to mature and bring down their costs. We have engaged widely on the June proposals, including with devolved Administrations, supply chain, investors and developers. It is important that Northern Ireland closes the renewables obligation to onshore wind on terms equivalent to those of Great Britain.

Sammy Wilson:
I thank the Minister for giving way again. Will she spell out the consequences for Northern Ireland should the Northern Ireland Executive decide to maintain the subsidies for longer than the period after 2016?

Amber Rudd:
The hon. Gentleman raises an important point. It is my position that, if Northern Ireland chooses to provide additional support for onshore wind, the consumers in Northern Ireland, and not Great Britain, should bear the cost.

18 Jan 2016 : Column 1155

We must make strategic choices on where public money is directed, because we cannot afford to support every project and every technology regardless of its contribution to energy security, and regardless of the cost. We need to concentrate our support on where technology has the potential to deliver at the significant scale that we need for energy security and decarbonisation, and where, to be viable, we still need to see significant falls in costs for technology.

Jeremy Lefroy (Stafford) (Con):
In that context, will she clarify when the next contracts for difference round for these new advanced technologies will be held, and whether the widest possible range of those technologies will be suitable for that round?

Amber Rudd:
My hon. Friend raises an important point. We have confirmed that there will be three new auctions for offshore wind. We are looking now at what would be included in that and the best way to drive down prices, because this Government are clear that that support will continue only as long as we continue to drive down prices, which is critical to looking after consumers.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC):
The Bill will transfer consenting decisions about onshore wind to local authorities. On a technical point, can the Secretary of State confirm that in the case of Wales power will be handed to Welsh local authorities, not the Welsh Government?

Amber Rudd:
The hon. Gentleman raises two points there. We have said that we are devolving to local communities and that we are ending new subsidies, so it would currently be unlikely for a new onshore wind project to go ahead, but we have agreed to discuss with developers the prospect of onshore wind without subsidy if it has local community support. In respect of Wales, I will discuss with the Welsh Government the best way to deliver on the hon. Gentleman’s suggestion. Rest assured, the devolved Administrations are fully aware of the plans and now support them.

In pursuance of those strategic choices, we are pushing forward with proposals for low carbon base load with a new fleet of nuclear power stations, and we are consulting on a closure date for coal and working to get new lower carbon gas-fired power stations built. Energy security must come first because it is the foundation of our future economic success, but that future must be low-carbon too, because climate change is one of the greatest long-term threats to our economic security. That low-carbon future cannot be achieved at any cost, because it is the hard-working families and businesses of Britain that are ultimately footing the bill.

4.51 pm

Lisa Nandy (Wigan) (Lab):
North sea oil and gas production has helped us to fund our public services, such as the national health service, through the taxes it has generated which are worth hundreds of billions of pounds. It has improved our national security by reducing our dependence on imports from other countries. It has bettered our energy security by providing a reliable

18 Jan 2016 : Column 1156

supply of gas and oil, fuels that will continue to play an important role in our energy mix, particularly for heating and transport, as we become a lower carbon economy. Crucially, the North sea also sustains hundreds of thousands of skilled jobs in Scotland and the north-east of England and in world-class supply chain businesses right across the country.

For these reasons there has been a cross-party consensus for some considerable time that we should do everything we can to protect those jobs and to continue to maximise investment in our North sea oil and gas industry. The incredibly tough economic conditions faced by businesses operating in the waters off our shores because of the major fall in the price of oil only underlines the need for parties across this House to work together to get on and implement the recommendations of the independent review produced by Sir Ian Wood.

James Cartlidge (South Suffolk) (Con):
The hon. Lady talks about the oil price. Does she agree with her hon. Friend the Member for Swansea West (Geraint Davies) that we should be trying to lobby the American Government to reduce shale output and increase the oil price?

Lisa Nandy:
One of the most important things we can do to help boost jobs and skills in the North sea is to have a long-term plan. I will say more about that as I make progress.

Sammy Wilson:
Does the shadow Minister agree that to a certain extent she is speaking with forked tongue? On the one hand she is saying that we have to decarbonise the economy, but on the other she is saying we have to increase the output of a carbon fuel—oil? Which is it? Does she want to decarbonise the economy or does she want people to buy oil?

Lisa Nandy:
Perhaps I can help the hon. Gentleman with that, as it is one of the things that he obviously struggles to understand. As we move towards a clean economy—there is widespread agreement in all parts of the House that that is a journey we must take—we need to think, too, about where we get our energy from in the short to medium term. There is no question about this—it is a fact that we will need to rely on oil and gas in the short to medium term. Because of that, the question that we face on all sides of the House is whether we import that oil and gas or generate our own.

Our view is that this transition must be made with due care and attention to the jobs, skills and investment we need in this country. It must also be made with due care for our environment, our health and our safety. That is a difficult thing to achieve. I very much welcome the fact that we are having this debate, but it seems to me that pitting the interests of the industry we currently have in the North sea against our interests in transitioning to a clean economy will not get us very far at all.

Geraint Davies:
Does my hon. Friend therefore agree that, with regard to the need to convert to renewables in the long run, one of the dangers of a very low oil price, other than restricting margins in the oil industry, is crowding out investment in renewables, and that therefore the cost-effectiveness of investing in renewables now should not be engaged by the current spot price of oil in the marketplace?

18 Jan 2016 : Column 1157

Lisa Nandy:
My hon. Friend has made several comments, some of which I agree with and some of which I do not, but I think he is right to point out the very real problems created by the falling oil price, such as the economic conditions faced by businesses currently operating in the North sea. It is clearly in our national interests to move forward with the recommendations made by Sir Ian Wood. That is why we must move ahead with his proposals to establish the independence of the new Oil and Gas Authority, and why we support the Government’s steps to progress that plan. As the North sea enters a new, mature phase and as investment flows into decommissioning offshore installations, I hope that Ministers will do everything in their power to ensure that that work is completed using the skills and expertise held by workers in the yards of Fife and the north-east of England.

Christopher Pincher (Tamworth) (Con):
I commend the hon. Lady for her bipartisan approach to the Bill. She has talked about the Oil and Gas Authority, which of course will set fees for the services it provides, and the Secretary of State will be able to determine what those fees should be. Can the hon. Lady indicate at what level she thinks the Opposition would set those fees, and for how long?

Lisa Nandy:
I am grateful to the hon. Gentleman for that question, which the Secretary of State will have heard. I am sure that either she or the Minister of State will attempt to respond to it later in the debate.

It is clear that there are still substantial remaining oil and gas reserves in the North sea, and future investment must absolutely not be limited to decommissioning activities. We remain the second largest producer of oil in Europe, after Norway. There are 300 fields currently in production, and it has been estimated that as many as 20 billion barrels of oil and gas remain to be exploited in UK waters. Much of that is understood to be in hundreds of small and marginal fields, which are much more difficult and expensive to exploit, so it is important that the newly independent Oil and Gas Authority is able to maximise investment in those fields if we are to seize that potential. That will require strong powers to encourage collaboration within the industry, resolve disputes between firms, and drive greater efficiencies to make further extraction viable, including consideration of costs.

Jeremy Lefroy:
Does the hon. Lady also agree that it is not just a matter of extracting the remaining oil from around the United Kingdom but about the huge oil and gas support services industry, which does so much around the world, contributing to the balance of payments and to jobs in the United Kingdom?

Lisa Nandy:
Yes, I agree. In particular, the ripple effect of what we do now in relation to North sea oil and gas will be felt not just directly by the workforce employed there, but by the UK workforce as a whole and around the world.

The Wood review also noted that carbon capture and storage has the potential to be of huge benefit.

John Redwood:
Is not the awful truth at the moment that, with oil at $29 a barrel, there will be practically no new investment in new projects in the North sea because it simply is not viable? What does the hon. Lady’s plan suggest on that?

18 Jan 2016 : Column 1158

Lisa Nandy:
We were keen to explore the future potential for the North sea for two reasons, one of which is the potential for the oil price to rise in future. While we have a rigged infrastructure worth a substantial amount of money still standing there, now is the time that we ought to explore the use to which we could put that infrastructure in the short term while trying to predict longer-term trends.

The fourth recommendation in the Wood review was that the Government need to work with industry to develop strategies in different areas, including for carbon capture and storage. Lord Deben, one of the Government’s own chief advisers on energy policy, argued:

“it would be very odd to produce legislation that did not allow specifically for the transportation and storage of greenhouse gases.”—[Official Report, House of Lords, 7 September 2015; Vol. 764, c. 1227.]

Lord Oxburgh, the former head of Shell, said:

“We need some kind of strategic framework within which private industry can operate in the CCS area.”—[Official Report, House of Lords, 19 October 2015; Vol. 765, c. 483.]

They are absolutely right. Some of the infrastructure in the North sea could be used to create an entirely new maritime industry with very many new jobs. This would also help us to realise the commitments on climate change that the Prime Minister and the Secretary of State recently agreed, rightly, at the Paris summit.

James Heappey (Wells) (Con):
While the shadow Secretary of State may indeed be correct that there is an opportunity for a new industry, does she not agree that to include it in this Bill would be to put an unnecessary burden on the industry at a time when it is challenged in an international market?

Lisa Nandy:
The Wood review pointed to the need for the Oil and Gas Authority to be able to take a strategic view. It also pointed to the need for us collectively, including Government, to consider a long-term strategy for carbon capture and storage. In our view, unless the Oil and Gas Authority is tasked with considering the future of carbon capture and storage, it will not form part of the plan. As I said to the hon. Member for South Suffolk (James Cartlidge), now is the time that we ought to be considering what the long-term future of the North sea is. That simply cannot afford to wait. We also believe very strongly that this should not come at the cost of jobs in the North sea in the immediate term. However, we should not let our urgent need for short-term solutions preclude longer-term thinking. In future, CCS could become a huge new North sea asset. That is why we propose that consideration be given to the opportunities that exist to use North sea infrastructure for CCS where that is economically viable.

Unfortunately, since the Bill was discussed by peers in the autumn, resulting in the one now before us, the Chancellor took the reckless decision to axe the £1 billion fund that he had promised to support new CCS projects during the course of this Parliament. That is one of the clearest examples yet of how this Government are damaging confidence among the people we need to invest in this country’s energy system by once again chopping and changing energy policies without any notice. The mishandling of the Government’s CCS programme means that the public will most likely pay, as companies understandably seek to recover costs relating to the

18 Jan 2016 : Column 1159

CCS projects in Yorkshire and Scotland that they progressed in good faith but that will now not proceed. That is why I have written to the head of the National Audit Office to ask that he launch an investigation so that we can fully understand the cost to the public of the Chancellor’s sudden decision. It is also why we will seek to amend the Bill to require the Secretary of State to bring forward a new carbon capture and storage strategy within a year.

There used to be consensus on this. The Prime Minister used to be a strong supporter of CCS too. Back in 2007, he said:

“even though in the UK we have the depleted oil and gas fields that are ideal for testing this technology, not a single pilot is yet taking place in Britain. We cannot afford this kind of delay.”

He was right then, and he is wrong now. The UN’s Intergovernmental Panel on Climate Change has stated that if we do not have CCS on a global scale, we are likely to see the costs of achieving targets on climate change being double what they would be otherwise. These targets may even be put out of reach entirely.

Jeremy Lefroy:
I am grateful to the hon. Lady for her generosity in giving way. Does she agree that there are a lot of opportunities for exporting CCS technology around the world and that they should be taken up?

Lisa Nandy:
I do agree with the hon. Gentleman. There is also an opportunity for us to make sure that the British workforce benefit from the skills to be gained from investing in that technology, so that we can export around the world not just the technology but the skills and knowledge of our workforce. That short and medium-term investment would be for our long-term gain, and it is important that we see it as such.

Experts at the Energy Technologies Institute have estimated that, without CCS, by 2020 the costs of reaching our climate targets could be in the order of £40 billion to £50 billion a year more than if CCS were deployed. Ruling out technologies that can cut the cost of low-carbon transition is bad news for bill payers and for taxpayers.

Mr David Anderson (Blaydon) (Lab):
Does my hon. Friend agree that the debate about CCS should not be happening today because it should have been concluded at least half a decade or even a decade ago? We led the world in clean-coal technology for decades, but that is no longer the case because of the actions of the Conservative party. We should be doing it now, not talking about it.

Lisa Nandy:
I agree with my hon. Friend. I am not one who is keen to cast back into history to appoint blame, but what I will say to him and to the Secretary of State is that a 10-year promise was made not just to industries and companies, but to the communities that stood to benefit and to gain a huge amount from CCS. Given that the Government have announced £250 million of investment in a competition for nuclear small modular reactors, we seem to be creating a complete lack of confidence that any of the other schemes will proceed. Such decisions and the way in which they are taken damage our energy security, not just in the short term but in the long term. We have to give a signal that Britain is open for business, but the Chancellor’s decision has done precisely the opposite.

18 Jan 2016 : Column 1160

That brings me to the part of the Bill relating to wind farms. There was once a time when the Prime Minister was so keen on wind turbines that he even put one on the roof of his house. Now his Government are trying to legislate to close a scheme that has successfully driven investment into the cheapest low-carbon energy source available. Wind farms already provide power to more than 8 million homes in Britain, and once again it will be energy bill payers who pay the price for the Government’s short-term decision. The Institute for Public Policy Research has estimated that ruling out onshore wind farms and relying on other low-carbon technologies to achieve our energy targets could increase costs for bill payers to up to £3 billion through to 2030. There will also be a cost to jobs and growth in an important clean-energy industry.

There is one area on which we agree with the Government, and that is that wind farms should not be imposed on communities that do not want them. That is why we support the Government’s proposals to put local authorities in charge of approvals for such projects. Yet the reality is that the Government are using the Bill to try to block wind farms even where they enjoy strong local support, and they are taking powers away from local authorities in relation to other areas.

Graham Stuart (Beverley and Holderness) (Con):
I am glad that the Labour party has effected a U-turn, because I argued for years under a Labour Government that imposing wind farms on communities against their will would lead to a backlash and to the project being brought to a halt. That is what has happened, so it is a bit late for the hon. Lady to say that she wants to listen to local communities. If we had listened to local communities all along, we could have had more onshore wind turbines where they were desired, rather than the backlash that has resulted in the current situation.

Lisa Nandy:
As the hon. Gentleman often reminded me when I served on his Select Committee, he is always right, and usually long before everybody else. We very much support the right of local communities to decide, but we do not understand why the Government do not. The real-time actions they are taking in this Bill will, in effect, block wind farms where there is strong local support for them. Moreover, the Government are taking exactly the opposite approach to fracking applications and seeking to deny local communities the right to decide what happens in their areas.

Christopher Pincher:
My right hon. Friend the Member for Wokingham (John Redwood) has pointed out that now onshore wind generates 1% of generating capacity. At most, when the wind is blowing, it is 7% or 8%. What percentage of our generating capacity would the hon. Lady like wind to supply? If it is significantly more than 8%, how would it be done without imposing wind farms on areas that do not want them?

Lisa Nandy:
First, the hon. Gentleman is wrong about the figures. Wind generates about 10% of our power. Secondly, there is no question but that we need to move towards a clean energy-driven economy. I think he accepts that case, as do two thirds of the British public, who said in a survey as recently as last September, in a poll of 2,000 adults conducted by ICM, that they would be very happy to have a wind farm operating within 2 miles of their house, if the local authority or community

18 Jan 2016 : Column 1161

had power over how it was operated. That is one reason I have told the Government we should not seek to block wind farms where they enjoy strong local support, and that we support the right of local communities to decide where they are based.

It looks as though the Chancellor has decided to sacrifice jobs and investment to win personal support from Back Benchers with a particular obsession with wind farms. It is unacceptable, and we will do what we can to defend wind energy from ideological attacks. The Conservative party manifesto said nothing about retrospectively shutting down this existing scheme—it was clear it would stop new subsidies for wind energy, but this is not a new subsidy; it is an existing one.

Chris Heaton-Harris (Daventry) (Con)rose—

Lisa Nandy:
Now that I have wound him up sufficiently, I will happily give way to the hon. Gentleman.

Chris Heaton-Harris:
The hon. Lady was being quite consensual, so would she associate herself with the remarks of the former leader of her party, the right hon. Member for Doncaster North (Edward Miliband), who said that blocking turbines in local communities would amount to antisocial behaviour?

Lisa Nandy:
The key thing is that we take communities with us. We have to go to local communities and make the case for how we create jobs, provide energy stability, cut bills and take action on global warming. If we do not take communities with us, we will not do any of that. That is why, I say to Government Members, it is completely hypocritical to argue one thing in respect of wind farms and precisely the opposite when it comes to fracking applications. I hope the Secretary of State has heard me.

Nor does it make sense to claim that the change is about affordability, as Ministers have consistently argued, given that onshore wind farms are one of the cheapest options available to help us secure our power needs and that the Government are pressing ahead with much more expensive options. A Conservative Member asked about this earlier. The Secretary of State is yet to clarify —perhaps she can tell us today—whether subsidy-free onshore wind farms will be allowed to compete for contracts for difference. As with the Chancellor’s decisions on solar energy and carbon capture and storage, this is yet another example of the Government chopping and changing their energy policy to the detriment of investment in jobs, growth and our energy security.

More than anything, the energy sector as a whole needs stability and confidence to get on and invest. I particularly recognise the urgency of supporting our North sea oil and gas industry and that peers have improved the Bill significantly since the Government introduced it. For those reasons, I will support it on Second Reading, but I hope Ministers will engage constructively with the debate and our amendments in the weeks ahead.

5.14 pm

Nigel Adams (Selby and Ainsty) (Con):
It is a great pleasure to follow the hon. Member for Wigan (Lisa Nandy).

18 Jan 2016 : Column 1162

I rise to welcome the Bill. I particularly welcomed the original version, before noble Members got their hands on it and removed clause 60, which would have delivered on my party’s clear commitment to the electorate before the general election. We promised no new subsidies for onshore wind farms and to give local communities the final say on onshore wind farm applications. A failure to deliver that promise in its entirety would be a failure to balance the interests of onshore wind developers with those of hard-working families in my constituency and right across the country. I also welcome the strengthening of the Oil and Gas Authority’s powers to ensure that we make the most of our reserves.

Almost a year ago, I introduced the Onshore Wind Turbine Subsidies (Abolition) Bill. It had precisely the same objective as the original clause 60 of this Bill. I would like to think that my ten-minute rule Bill was a trailblazer for the Government’s Bill. I introduced my Bill, because if we are to subsidise renewable energy sources it is essential to support technologies that will produce power when we need it, not just when the wind blows. Given that one man’s subsidy is another man’s tax, it is crucial to make sure that when we spend money, we do so wisely.

Onshore wind farms generate below 20% of their stated maximum output for 20 weeks a year, and below 10% for nine weeks a year. That means that wind farms are, in effect, failing to reach maximum output capacity for more than half the year. On average, they exceed 90% of their rated output for only 17 hours a year. There is also a very significant issue about whether those wind farms will be able to reach such heady peaks when they are actually needed. Worse still, Britain’s wind farms are routinely paid large sums not to generate electricity—as much as £1 million each week in 2014. [Interruption.] Does the hon. Lady want to intervene?

Caroline Lucas:
First, the issue about being paid money when the power is not actually used is not unique to renewable power. [Interruption.] I am not going to engage with someone intervening from a sedentary position. My second point is that the hon. Gentleman does not seem to have heard of batteries or interconnectors, and does not seem to recognise that Germany is moving into renewables massively. He is in another century, while the rest of us have moved on.

Nigel Adams:
I am in a century that backs our constituents and wants an effective energy sector that produces power when we actually need it.

Albert Owen (Ynys Môn) (Lab):
I hear what the hon. Gentleman says about renewables, but is he not really making a case for a balanced energy policy? In the summer, there is a need to switch off some generation because of low demand. It is very expensive to do that for gas or nuclear power stations and then to bring them back online. Wind is actually cheapest, and we need such an intermittent energy source as part of the mix.

Nigel Adams:
The hon. Gentleman makes a fair point, or at least it would be fair if it was accurate, which unfortunately it is not. Wind has to be backed up by fossil fuels, which makes no sense whatsoever. We must take into consideration the full system cost of wind.

18 Jan 2016 : Column 1163

Such payments, which are described as constraint payments, ultimately end up on consumer bills, meaning that the public are in effect subsidising the UK wind industry not to produce electricity. One really could not make it up.

John Redwood:
When we get our coldest days in winter, they are usually days of no cloud and practically no wind, but that is exactly when we need maximum power.

Nigel Adams:
My right hon. Friend makes a perfectly sound point. That is the case today, for example. I will be more generous to the wind industry: I think that 1.11% of power today is being generated by wind. We all know what happened in November, but I will come on to that a little later. We are becoming more reliant on intermittent renewables.

Andrew Percy (Brigg and Goole) (Con):
I live opposite a wind farm in my hon. Friend’s constituency. I do not blame him for not preventing it, because it was before his time. Many of the people who are in favour of wind farms are not surrounded by them as people in my constituency are. On the issue of renewable energy and its intermittent nature, does he not agree that one form of generation that we should be promoting more and that we know very well in our area is biomass, which not only supports thousands of jobs at Drax power station, but is a source that we can turn on and off at will?

Nigel Adams:
My hon. Friend and neighbour is absolutely right. I applaud the work that Drax power station has done and I look forward to biomass generation going ahead at Lynemouth, which is under new ownership. It is a much cleaner fuel than coal. Indeed, it reduces emissions by about 80%. I would like the Government to get behind more biomass. I am sure that they will have an explanation for why there might be three pots for offshore wind, but I would like biomass to be able to fight on an even keel with the other technologies.

There is increasing dependence on offshore wind and solar. The situation is getting worse, not better. The nuclear stations, when built, will form part of the solution, but they cannot react to changes in demand or failures in supply anything like fast enough to keep the lights on. They can provide only base-load power, which is important but is not the answer to the intermittency problem.

George Kerevan (East Lothian) (SNP):
The hon. Gentleman lectures us on intermittency, but one of the most serious aspects of the intermittency in the UK is our ageing nuclear power plants, which go offline continuously, with catastrophic effects on supply.

Nigel Adams:
The hon. Gentleman makes a fair point. That is why we need the new stations to be built a bit sooner. If previous Governments had been a bit braver, we might not be in the situation that we are in now.

In the circumstances, is it wise to phase out all the coal in the system before sufficient gas and biomass have been deployed to make up the difference? I ask the Minister to restate the Government’s commitment that

18 Jan 2016 : Column 1164

coal will be phased out of the system only after sufficient biomass and gas generation have been brought forward to make up the loss.

Graham Stuart:
Does my hon. Friend accept that if we are to get the dirtiest of fuels off the grid and clean our atmosphere, we have to state that as an objective, as the Government have rightly done, because only after that signal will the investment come forward to replace it? If it will not definitely be phased out, why will people definitely invest?

Nigel Adams:
That is a fair point from my hon. Friend, but we certainly need bridging technologies, because we will have a gap in which we could see days like those we saw in early November.

Andrew Percy:
I thank my hon. Friend for giving way. Although we are aware that coal is the dirtiest form of generation, it employs an awful lot of people in our area for one thing. Secondly, does he agree that the real concern is that losing Drax, Eggborough and Ferrybridge will put us in a position where the lights go off? Woe betide any Government who preside over the lights going off. We need certainty that losing coal will not lead to that.

Nigel Adams:
I totally agree. That is another great advertisement for sustainable biomass. We have paid for these assets—the Central Electricity Generating Board built these power stations—so let us sweat them for more decades. Biomass is the answer in the short term. Who knows? There might be other technologies that we could be using at them, such as hydrogen power. I am sure that there are the brains out there to find a way to use that resource.

Sammy Wilson:
Will the hon. Gentleman give way?

Nigel Adams:
I will give way one more time if I am allowed, Madam Deputy Speaker.

Sammy Wilson:
Does the hon. Gentleman accept that another reason for keeping coal generation is that it is the cheapest form of electricity generation at present? Our competitors, for example Germany, are building new coal stations. When it comes to retaining jobs in the United Kingdom, we have to be cognisant of that.

Nigel Adams:
I agree with the hon. Gentleman. It is tragic that we have sped up the demise of coal in this country. He will be aware that the last remaining deep coalmine was in my constituency. Unfortunately, it closed at the back end of last year.

Mr Andersonrose—

Nigel Adams:
I really need to move on, but I will give way to the hon. Gentleman because he is a grand fellow.

Mr Anderson:
You’re absolutely right I’m a grand fellow!

18 Jan 2016 : Column 1165

If we are to put public subsidies into trying to keep the lights on, why not subsidise the coal industry? As the hon. Gentleman said, we will continue burning coal, but it is not dirty British coal, it is from places such as China, Ukraine and Colombia where hundreds or thousands of men are dying every month or year. It is morally wrong to burn that coal and put British miners on the dole. That is completely wrong.

Nigel Adams:
The hon. Gentleman is absolutely right, and if he was here at the back end of last year when we debated the closure of Kellingley colliery, he will have heard me very much echo his sentiments.

At the end of 2015 there were already 490 operational wind farms in the UK with an install capacity of 8.3 GW. The Government estimate that in 2015-16, £850 million of direct support will go towards funding onshore wind farms. A fraction of that sum could deliver reliable, low-carbon, cost-effective renewable electricity that can react to changes in demand if it were diverted to more and reliable renewables, such as sustainably sourced biomass. I use the words “direct support” on purpose because the £850 million refers only to subsidies that are paid to those wind farms. The inherent failings of wind farms must be compensated by someone, which comes at a cost. If there is a risk that the wind will stop blowing, National Grid must ensure that it has sufficient capacity to mitigate that risk.

If a wind farm has a load factor of 30%, National Grid must make provision for generation for the other 70% of the time. If the new wind farm has to be built deep within our beautiful countryside, or out at sea where it is more expensive, National Grid has to pay for new transmission lines. That all comes at a cost, and those costs are paid by all generators, not just the wind farm developers that caused the problem. It is yet another hidden subsidy for wind power.

The notification of inadequate system margin that occurred on 4 November was a prime example of a problem caused by a lack of conventional capacity, because on that very still day, the wind was not blowing and it could not make up that capacity, despite all our investment into wind power. All generators—and ultimately all consumers—had to pay for balancing actions that National Grid had to take, at a cost of £2,500 per megawatt-hour. That is something like 50 times the usual cost of power and—at least in part—that was because when we needed our costly wind capacity, it simply was not available.

I warmly welcome the commitment made by the Minister last week when, in a written response to a parliamentary question from the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), she promised that in the first half of 2016 the Government would publish research into those hidden costs, so that we can see the whole system costs of different renewable generation technologies, and that the findings will be used to inform policy decisions. I hope that is the first sign that future contracts for difference auctions will not simply unleash new waves of intermittent renewable technologies. More sensible, reliable renewable generation options are available to us, but the hangover from the previous Government and our coalition partner’s love affair with wind will suffocate those options unless we act.

Of course, the madness does not stop with the extra costs, because there is also a carbon problem. If a wind turbine has an availability of 30%, National Grid needs

18 Jan 2016 : Column 1166

either a vast number of other wind turbines spread all over the place in the hope that the wind will be blowing somewhere, or—this is more likely—a gas or coal station on standby to generate the rest of the time. We therefore subsidise a wind turbine to push fossil fuels off the grid, while simultaneously subsidising a fossil fuel power station to stay online and generate carbon dioxide for more than half the time when the wind is not blowing—you could not make it up, Madam Deputy Speaker. The same is true for offshore wind farms, albeit they have slightly higher availability.

In conclusion, I recognise that the Conservative Government cannot make up for the mistakes of the past with retrospective action. A deal is a deal, and existing onshore wind is here to stay. We cannot reverse the insane situation in which we banked our energy security on the vagaries of the weather, but we can put an end to the madness. We can stop all new investment in onshore wind, as we have promised to do, and we can think much more carefully about the case for investing in other intermittent technologies.

5.30 pm

Callum McCaig (Aberdeen South) (SNP):
That was an interesting contribution from the hon. Member for Selby and Ainsty (Nigel Adams). It was full of problems but not many solutions—the solution being a balanced energy market that allows flexibility. Probably the only thing I agree with him on is biomass. I also agree that a deal is a deal, but it is a shame that that has not been applied to onshore wind investors who have had deals scuppered because the goalposts have been moved.

I welcome the opportunity to speak on Second Reading of the Bill. It is important that we have finally got round to discussing it. It is nearly two years since the review by Sir Ian Wood of the UK continental shelf, which made a number of recommendations. As we have heard, it commanded, and still by and large commands, cross-party support, although there are problems with the details. I and some in the oil and gas industry have had a degree of frustration that progress has not been as swift as it could have been in fully establishing the Oil and Gas Authority, but the delay in introducing the Bill and the uncertainty that that has caused, particularly in respect of the grace periods for onshore wind, has been much more unhelpful.

Broadly speaking, the OGA is up and running and working effectively. The OGA and its head, Andy Samuel, enjoy tremendous respect and credibility within the oil and gas industry. It is beholden on all hon. Members to commend the work that has been done in setting it up. The team that is in place is impressive and is doing very well. The Bill will give them the full armoury of powers they require to ensure that the UK continental shelf thrives.

Scottish National party Members very much support the plans for the OGA in the Bill but—this will come as no surprise to the Secretary of State—we are not so keen on the onshore wind aspects. I am not required to explain the importance of the oil and gas sector to hon. Members. As has been said, it has generated in excess of £300 billion in tax revenue; 45 billion barrels of oil have been extracted, and potentially up to 24 billion are left; and it supports 360,000 jobs, with 36,000 directly involved.

18 Jan 2016 : Column 1167

Graham Stuart:
Does the hon. Gentleman agree on these two things: first, that while we are burning oil and gas, it might as well be our own; and, secondly, that saying we are subsidising oil and gas simply because we tax it slightly less is a false narrative?

Callum McCaig:
I agree very much with the hon. Gentleman. It strikes me that there are certain parallels with the coal conversation moments ago. That situation could come to pass if we do not support the North sea. We need to transition away from oil and gas, but that will take some time given the economics at play. If we are using oil and gas—we will be doing so for the foreseeable future—it might as well be ours. We might as well get the economic benefit of it, and we should certainly use that economic benefit to try to diversify and invest in other areas. The hon. Gentleman made the point on subsidies. The oil and gas sector is taxed very highly, and more highly than any other sector of which I am aware. It is taxed less than it was, but we probably require it to be taxed less if we are to see the benefit of the industry in future.

The OGA is vital to that future and it is hugely important that it is put on a firm footing. It must be given the regulatory powers it requires and the ability to engage fully with industry on access to infrastructure, plans for investment and so on. I very much support the Government in ensuring the OGA continues to have a laser-like focus on maximising economic recovery, which is fundamental to that purpose. Over the years, there have been umpteen changes to oil and gas. It is in the nature of the industry, with its huge capacity to generate income, that the goalposts have changed substantially during that time, but I plead with all hon. Members not to change the goalposts again. The industry has been working for two years towards proposals on maximising economic recovery, which have universal buy-in and require that the OGA’s focus is not complicated.

Sammy Wilson:
Does the hon. Gentleman accept that the focus must be on economic regeneration, rather than further regulation? The industry, especially at this time, cannot afford more costly regulation.

Callum McCaig:
I disagree. The absence of a strong regulator is where there have been significant problems in the oil and gas industry, in particular with access to infrastructure. The inability to get two parties with competing commercial interests to agree a deal on access to oil and gas infrastructure—a pipeline, for example—has meant that investment decisions have not been implemented. The industry needs a regulator that is hard-touch where required. I very much hope that the threat of sanctions from the OGA will in itself be enough, and that they will not be required. The OGA probably recognises that itself. Issuing sanctions left, right and centre would suggest that its soft skills, its influence and the buy-in the Wood review has brought forward, are not working effectively enough. Where there is no compliance or buy-in to the idea of maximising economic recovery, and where disagreements about access to infrastructure are inhibiting investment, the regulator should go in—and go in hard—to ensure that what everyone is supposed to be working towards is delivered.

David Mowat (Warrington South) (Con):
The hon. Gentleman mentions, correctly, the need for a laser-like focus on maximising economic recovery as the objective

18 Jan 2016 : Column 1168

of the Bill—and goodness knows we need it. Is it therefore his party’s position that the amendment in the House of Lords on carbon capture and storage is not necessary at this point, because it could risk reducing that laser-like focus?

Callum McCaig:
Yes. I am coming on to that point now. I have spoken about carbon capture and storage many times and I will continue to do so. We fully support that. However, there is a requirement, which the shadow Secretary of State talked about, to have the review and the strategy in place before it can be imposed as one of the principal objectives of the OGA. If we dilute the core functions of the OGA, we distract from that attention. We should remember that the OGA and the Wood review come from a time when oil was over $100 a barrel. Those were the circumstances required to support the industry, which was going through difficult times, at a very high oil price. Those pressures are much higher today. I agree that we need to allow the OGA to bed in. Perhaps in future, once there is a strategy in place and it can be demonstrated that it has the support of the Government from both a financial and strategic point of view, that might be something we want the OGA to do. At the moment, however, I think that is premature.

As I said, the Wood review comes from a time, two years’ ago, when oil was $110 or $115 a barrel. It is now $29 a barrel. The game has changed significantly. We have to accept that, while this is a vital step in supporting a vital industry, it will not be enough in and of itself. We need fiscal changes to the tax regime, particularly on incentives, and to review the tax level as a whole.

“Since the last Budget, the oil price has declined further, and we must continue to do as much as we can to help boost confidence and encourage investment in the UK Continental Shelf. If the oil price continues to be lower for longer, there is little doubt that alongside industry’s own concerted effort to improve its efficiency, we will need to work with Treasury on additional measures, including revisiting the current headline tax rate—consistent with the government’s commitment to the sector’s tax rate falling over time.”

James Cartlidge:
This issue clearly has to be approached through partnership between the UK Government and the Scottish Government. That being so, and given that Scottish Government are about to get new tax-raising powers and that this is currently a real crisis for the key UK and Scottish strategic economy, will it be the policy of the Scottish Government to use those powers to raise funds to support the industry, if need be?

Callum McCaig:
Frankly, I am not sure how income tax could be used to boost the oil and gas industry, but if the hon. Gentleman has any concrete suggestions—[Interruption.] On my understanding of the Scotland Act 2012 and of the progress made on tax-raising powers, I do not see how the Scottish Government would have the ability to do anything that would materially affect the fiscal regime. If the hon. Gentleman wishes to join us in calls for corporation tax for oil and gas revenues to be devolved to Holyrood—or, indeed, for full fiscal autonomy—he would be more than welcome to do so. The suggestion that the minimal powers devolved to Scotland for raising tax revenues and achieving economic objectives such as boosting the business environment could in some way be used to boost the oil and gas sector is, at best, naïve.

18 Jan 2016 : Column 1169

John Redwood:
The UK Government are not currently collecting any special North sea tax revenues because the oil price is so depressed. I might agree with the hon. Gentleman if reforms were made in the future, but will he give us an impression of the industry’s perspective in the area around his constituency on what will happen to jobs and investment at these oil price levels?

Callum McCaig:
The oil industry is going through a difficult period, but there is a fair degree of resilience and optimism in these difficult times. A concerted effort is being made to show that it is not a sunset industry, and that it will work through what needs to be done. As was clear in the quote that I cited, the industry is making efforts to reduce costs. We in this Chamber can do nothing about the price of oil, but we can do something about the investment climate, which I think would be significantly enhanced with changes to the fiscal regime. Aberdeen is seeing job losses on a fairly sizeable scale, but it is probably still performing above average, and I certainly hope that it continues to do so.

The issue of tax revenues is not only about the supplementary charge in corporation tax or the petroleum revenue tax, because the full range of tax revenues needs to be factored in, including income tax, national insurance and the corporation tax paid by the supply companies. This is a major sector, and if we can invest in the skills and ensure that we bridge over what everyone agrees will be a temporary downturn in the oil price—how temporary is a matter on which I shall not speculate, because that could end up with my looking daft—that support will help.

Changing the tax regime would send a very powerful message to those looking at investment. If investment is not made in the UK continental shelf, because of the nature of the business the investment will be made in west Africa, Kazakhstan, Brazil or the Gulf of Mexico. It is not a zero-sum game. Precisely because very little tax is being paid—unusually so—the Treasury is not banking on North sea oil to deal with what it needs to pay for, so it can afford to make the changes. The revenue forecasts for the next few years are low, and changing the regime now would make that viable. It would also send the clear message that this is a basin that is worth investing in. If there is investment, there are jobs, the skill base is maintained, and the supply chain is supported in a way that ensures that it can invest in and develop products not only for the North sea but for the global oil and gas industry, into which the United Kingdom supply chain—particularly around Aberdeen—is making great efforts to diversify.

I am very much in favour of the OGA’s establishment as an independent regulator. I am sure that, as we enter the next stage, there will be discussions about the nuts and bolts, but we want it to happen, and happen very soon.

Let me now move on to the closure of the renewables obligation. [Interruption.] Excuse me?

Mr Peter Lilley (Hitchin and Harpenden) (Con):
We thought that the hon. Gentleman was moving on to the closure of his speech. [Laughter.]

Callum McCaig:
I am sorry to disappoint the right hon. Gentleman. I will be brief, to a degree. I do not need to rehash the arguments about the closure of the

18 Jan 2016 : Column 1170

renewables obligation, which is disproportionately affecting Scotland, because 70% of the wind farms that are in the pipeline would be there. I know that the Government have said that they want to try to reintroduce the closure in order to meet a manifesto commitment, but I urge them not to do so. If they do, we shall oppose the move.

Sammy Wilson:
Given that fuel poverty in Scotland has increased by two and a half times since 2002—from 13% of the population to 34%—how can the hon. Gentleman justify further subsidies for wind turbines, which are paid by consumers and most of the proceeds of which go to well-heeled large landowners?

Callum McCaig:
I do not think that that is the solution to fuel poverty. I think that the solution to fuel poverty is to insulate homes, in which there is huge and disproportionate investment in Scotland, and to end poverty. We have made various suggestions about how to do that, but the fact is that fuel poverty does not exist in a vacuum; it exists in the environment of actual poverty.

Onshore wind is a cheap renewable, and the closure of the renewables obligation is set to save bill-payers the princely sum of 30p. Moreover, it will produce up to 63 million tonnes more carbon dioxide.

Nigel Adams:
Will the hon. Gentleman give way?

Callum McCaig:
The hon. Gentleman’s colleague seemed to want me to nip on a wee bit, but I am happy to take an intervention.

Nigel Adams:
I am very grateful. I apologise to my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), who is far more senior than I am.

The hon. Gentleman talks of how cheap onshore wind is as a renewable. Does he not accept that it must be backed up by fossil fuels, which are not so cheap? If the full system cost of onshore wind is taken into consideration, it is one of the least affordable renewable technologies that we have.

Callum McCaig:
So we are backing up the cheap renewables with fossil fuels that are not so cheap, and the solution to that is to use the fossil fuels that are not so cheap all the time? That sum does not quite add up. I am not sure that I have worked out the equation.

We have been EVELed out of the changes in the planning regulations, but I would not have opposed them anyway. However, I think that what is good for the goose should be good for the gander, and that the policies should respect the different attitudes that exist in the different nations of the United Kingdom. We in Scotland would like onshore wind generation to continue, and we hope that there will be mechanisms to enable that to happen—which brings me neatly to the idea of a subsidy-free contract-for-difference mechanism that would provide the price stabilisation and allow a route to market for onshore wind, the cheapest form of renewable generation. I am sorry; I could not help it. That was there for the benefit of the hon. Member for Selby and Ainsty.

Finally, the emissions trading proposals would ban the Government from using carbon accounting through the European emissions trading scheme. I and my party are not opposed to that in principle, but would recognise

18 Jan 2016 : Column 1171

we are probably a little premature in terms of agreeing that in advance of the fifth carbon budget, which is to come forward.

David Mowat:
In principle, that apparently is the position of the hon. Gentleman’s party, because to leave the ETS, which is a Europe-wide system, seems an odd tack to take for a party that is always telling us how European it is. In particular, surely the way to fix this is to get a proper ETS, not one that has a price of carbon that is so low? That is the way forward, not by leaving it. Surely as good Europeans, that cannot be the SNP position?

Callum McCaig:
I do not believe there was any suggestion to leave. I would not suggest we cannot use or do it, but, rather than looking to buy carbon emissions and the capacity off our dear friends on the continent we should be looking to be the leader and to have that high ambition. We could be in a position not only to stop counting those emissions towards our own contributions, but sell some to others who may not be quite so good in dealing with it.

In closing, as I see it there are three aspects to this Bill: the Oil and Gas Authority, the onshore wind and the emissions trading. We at this stage support two out of three, and, as Meat Loaf said, “Two out of three ain’t bad.”

Several hon. Members rose—

Madam Deputy Speaker (Natascha Engel):
Order. I am going to have to impose a 10-minute limit on Back-Bench speeches from now on, and we will see how we get on.

5.51 pm

Mr Peter Lilley (Hitchin and Harpenden) (Con):
It is a great pleasure to follow the two previous speakers, my hon. Friend the Member for Selby and Ainsty (Nigel Adams), who made an extremely realistic speech, and the hon. Member for Aberdeen South (Callum McCaig), who I thought was amazingly complacent about the primary industry in his constituency, which is going to suffer very considerably for a considerable time from the run-down in the oil industry. It is amazing to me that the SNP can abort two potentially valuable industries in Scotland—underground coal gasification and fracking—which might have provided alternative jobs for the people in his constituency, and I hope he will look closely at that.

Wherever we are on the spectrum on global warming, from sceptical to alarmist, we can surely all agree on one thing: that we should try to achieve the targets to which we are committed for reducing CO2 at the least cost to our constituents, because it is ultimately they who bear it either through their budgets or their jobs. So when my right hon. Friend the Secretary of State found that subsidies were proving unnecessarily generous to achieve our targets and we were achieving them ahead of time, so that without changing those targets she could reduce those subsidies, she assumed the whole House would be in universal agreement with what she was proposing; even I, for once, was on her side. But it was not so: there were calls from the green lobby and

18 Jan 2016 : Column 1172

the Opposition to keep subsidies higher than necessary for longer than necessary to achieve the targets to which we are committed, and key amendments in this Bill seem designed, likewise, to increase the costs of achieving our targets.

Clause 80 will not allow the use of the emissions trading scheme to achieve our targets, yet the whole purpose of the ETS is to ensure that those who can abate emissions at the lowest costs, do so. So by excluding the use of that, we are ensuring that higher costs are incurred to achieve a given abatement in emissions. Another amendment prolongs the subsidies for onshore wind for longer than needed, even though that is unnecessary. So I shall, unusually, be supporting the Front Bench in seeking to have both those amendments from the Upper House removed.

Above all, we have created a framework that commits us to load higher costs on UK consumers and businesses via the Climate Change Act 2008 and all its ramifications than any other country in Europe. Despite all that, we will ensure, because of the way the system works, that we do not reduce the amount of carbon dioxide emitted into the atmosphere by one molecule more than would be the case if we were doing the same as the rest of Europe.

Let me explain why that is so. At Paris all the countries of the world agreed to make commitments on what they were going to do in future to curb the growth of their CO2 emissions. The only exceptions were the countries of Europe, who put in a total figure for the whole of Europe and are now to allocate that figure among the member states. Because we are committed to doing so much more than the average in Europe—indeed, than anybody else in Europe—all that does is to reduce the amount by which the other countries in Europe will have to reduce their emissions. So we have increased the burden of costs on British households and business, reduced the burden of costs incurred by our partners in Europe, and not reduced the emissions of CO2 by a single molecule.

That is an extraordinary thing to achieve. It has puzzled me a for a long time how it is that we have a political class, particularly the green lobby that straddles both sides of the Gangway—

Sammy Wilson:
Not universally.

Mr Lilley:
Indeed, not universally on the Opposition Benches. It puzzles me that the political class is committed to such perverse policies. Then I found a possible hint of an explanation, when someone mentioned to me, Madam Deputy Speaker, a book that I am sure that, like me, you have not read but have heard about called “Forty Shades of Grey”. It is apparently a mildly pornographic—

Graham Stuart:
Fifty, not forty, I think.

Mr Lilley:
It is apparently “Fifty Shades of Grey”. [Interruption.] Have I any higher bids? I have not read it; I have not even read the title of it. However, the surprising popularity of that book demonstrated that sadomasochism, or the infliction of pain and the submission to pain, are far more widespread tastes than we had previously thought. It seems to me that in the political sphere there is a similar belief that it would be popular to inflict pain or submit to pain by green policies. We might say that what we are suffering from in this country is “Fifty shades of green”.

18 Jan 2016 : Column 1173

The trouble is that Members who are committed to this doctrine measure the success of their policies not by what they will achieve, but by what they will cost, and not by how effectively they will reach a given destination, but by how onerous are the burdens they can place on Britain, British households and British business.

That pain is very significant. The Committee on Climate Change worked out the costs of climate change policies in 2014-15, and it came out at about £250 per household. [Interruption.] The right hon. Member for Doncaster North (Edward Miliband) may disagree with the Committee on Climate Change, which he helped set up; if so, please intervene—but of course he cannot sustain his position. That figure is set to double by 2020, to double again probably by 2030, and to double again by 2050. That is the direct effect on household budgets both through their energy bills and the cost of more expensive products because energy prices feed through to product costs.

There is also the cost on jobs. We have lost the aluminium industry already, and earlier today we were seeing the serious the impact of job losses in the steel industry. Of course, the basic reason why there are job losses in the steel industry is that there is a worldwide glut of supply, but the reason that falls excessively on this country is that our industrial energy costs are higher than those anywhere else in Europe. That is why we are suffering disproportionately at the moment. I am reliably informed by my right hon. Friend the Member for Wokingham (John Redwood) that we are importing bricks. I recently had lunch with a businessman who said that 7% of his output comes from the UK but that 28% of his energy costs were in this country.

John Redwood:
Is it not the point that these green targets can bear down very heavily on our country without reducing carbon dioxide emissions at all, because these products are being made somewhere else and perhaps producing even more carbon dioxide?

Mr Lilley:
My right hon. Friend is absolutely right. This is yet another example of the perverse effects of what we do. We impose costs on our own country, our own industries and our own households but we do not even achieve the objective of reducing carbon dioxide emissions. In fact, in these cases we probably marginally increase them.

My appeal to the House is that we start looking at this whole business in a rational way. Let us take all the targets to which we are committed as a given. Like the hon. Member for East Antrim (Sammy Wilson), I think they are unnecessary and unwise, but let us take them as a given and seek the least costly way of achieving them. Let us seek to achieve them in a way that will place the fewest burdens on British households and result in the fewest job losses and the least destruction of industry and output. Let us not measure our success by how much pain we can inflict and how much harm and burdens we can submit to, as we have done through the 50 shades of green up to now.

Caroline Lucas:
Given that the right hon. Gentleman is apparently genuinely concerned about costs, why does he not extend that same analysis to nuclear energy? For example, Hinkley is going to put a massively greater strain on household budgets than renewables would do and it will not help us to get emissions down for at least a decade.

18 Jan 2016 : Column 1174

Mr Lilley:
When the Energy and Climate Change Committee produced its report, I voted against that project precisely because I was worried that we were committing to an unnecessarily high cost, although I am not against nuclear in principle. I do not agree with the hon. Lady that it is much more costly than offshore wind. In fact, I think it is less costly. It is still unnecessarily costly, however, and we should therefore look again at options such as modular nuclear. If she were to put forward a motion to reduce the subsidies for offshore wind so that they were equal to those for onshore wind, I would happily second it. I would happily join her in that because I am genuinely in favour of reducing costs.

Chris Heaton-Harris:
Madam Deputy Speaker, I am sure you would agree that my right hon. Friend’s speech is spanking this out of the park. Does he agree that the way in which we have moved forward by introducing an element of the market into the mechanism of bidding for subsidy in our energy profile is the right way forward, and that the renewables obligation is the wrong way forward? I also support the Government.

Mr Lilley:
I agree. It was very late in the day when we introduced that system, so at least we incurred the minimum cost of subsidy to achieve the given objective rather than just plucking out a number, which would inevitably have been high, given that civil servants always are rather generous with public money and set targets high, just so that they can say, “Oh look, we have achieved our quantitative solution, even if we have done so at unnecessary expense.”

Graham Stuart:
My right hon. Friend is making an entertaining speech. Offshore wind has a price of around £140 per MWh, but the industry expects to bring that down to around £100 by 2020, and by the time we have any nuclear power stations, it is pretty likely that it will be below the cost of nuclear and falling, whereas the cost of nuclear will be fixed for the entire time.

Mr Lilley:
My hon. Friend is normally very rational, but on this occasion he is being irrational. He is suggesting we should invest in very expensive and currently inefficient products in the hope that the next generation of such products will be cheaper. However, other people would also be able to invest in those cheaper products and compete with us. If they are going to be cheaper in five years’ time, we should wait five years and do it then.

6.4 pm

Edward Miliband (Doncaster North) (Lab):
It is a privilege to follow the unique speech of the right hon. Member for Hitchin and Harpenden (Mr Lilley). I bow to his greater knowledge about 40 or 50 shades of grey—or green, for that matter. It is also fair to say that he has taken a consistent position on these issues. He was one of the three Members of this House—

Mr Lilley:
Five.

Edward Miliband:
I beg his pardon. He was one of the five Members who voted against the Climate Change Act 2008, which was supported right across the House. It will not surprise hon. Members to hear that I approach this subject from a slightly different perspective from his, and I want to focus on how the Bill can be improved. Given the scale of the challenge we face, the right

18 Jan 2016 : Column 1175

question to ask about any energy or climate Bill before the House is this: will it do everything necessary to meet our obligations and the requirements placed on us to take a leading role in tackling climate change? I believe that things can be done to the Bill to ensure that it does so.

This Bill is unlike many other Bills that have come before the House, in that a very important event has happened in between its being introduced in the other place and its Second Reading today. That event was the historic Paris climate change agreement. I paid tribute to the Secretary of State when she made her statement on the Paris agreement, and I do so again today for the incredible job that she has done.

My case to the House is that we need to reflect the high ambition of Paris in the Bill. In particular, I want to set out why the Government, in the light of the Paris commitment to a long-term global goal of zero emissions, should use this Bill to legislate for the same objective here in the UK. We need to legislate for zero emissions in law, with the date to be advised by the independent Climate Change Committee. I want to thank Members across the House whom I have talked to about these questions. They include Members on my Front Bench, the hon. Member for Brighton, Pavilion (Caroline Lucas), Liberal Democrat Members, Scottish National party Members and, indeed, the hon. Member for Beverley and Holderness (Graham Stuart), who plays an important role as the chair of GLOBE International, the international parliamentarians’ committee. If other hon. Members want to know more about this subject, a paper has been published today by the organisation Sandbag, setting out the case. My case is threefold. It is about consistency between international agreements and domestic action; it is about the economic case; and it is about the effect we can have on other countries.

Mr Lilley:
Given what I said earlier about the effect of our having commitments that are higher than those of the other countries in Europe, which simply reduces the amount to which they are committed under the Paris agreement, if the right hon. Gentleman wants to raise our target even higher, would he not be reducing to an even lower level the amounts by which those countries would have to reduce their emissions in order to reach the EU global total?

Edward Miliband:
No, because the EU target is set on the basis of effort-sharing between different countries, and we are one of the most important countries contributing to that effort-sharing: the more we do, the higher the EU target can be. That is part of being in the European Union and playing our role in raising these objectives.

My first case for acting relates to consistency between international agreements and domestic action. When I set a target of 80% by 2050 in the Climate Change Act, that was agreed on a cross-party basis and we were at the most radical end of the spectrum. That target was formulated to give us a fighting chance of keeping global warming below 2°C. However, Paris has crucially moved the world on from that. Paris sets a twofold objective: to try to keep global warming below 1.5°C, given that we are already at 1°, and, crucially, to achieve the long-term goal of zero emissions.

18 Jan 2016 : Column 1176

John Redwood:
As someone who did not vote for the right hon. Gentleman’s climate change legislation, may I ask him what role he thinks the Act has played in the tragic job losses in the steel and other high-energy-burning industries in Britain?

Edward Miliband:
It is totally simplistic to say that the Climate Change Act has led to that. It is a result of a whole series of decisions that the Government have had to make. As the right hon. Gentleman and the right hon. Member for Hitchin and Harpenden will remember, Lord Stern’s report made the crucial point that the cost of not acting on climate change will be greater than the cost of acting. Just look at the floods that we have seen in the last couple of months! We are going to have a lot more of that—coming soon to a constituency near you! I am sorry to accuse the right hon. Member for Wokingham (John Redwood) of sticking his head in the sand, but that is exactly what we are doing if we say that we do not need to act, that everything will be okay and that we should just carry on with business as usual. To be fair to the Secretary of State, who might not thank me for saying this, I do not think she believes that that is what we should do. She is on the right side of this argument. Of course we have to do it at the lowest cost we can, but let us not pretend that somehow this problem does not exist—we are seeing its effects all around the world, and if we do not act, we are going to have a lot more of them.

Andrew Percy:
Although I agree with much of what my neighbour said about climate change, the perception, which seems also to be partly the truth, is that in trying to act in this country we have simply exported a lot of our emissions overseas and we are now importing steel which is dirtier than that which would be produced here. That is what steelworkers in my constituency, who are facing job losses, are saying.

Edward Miliband:
The carbon price floor was introduced by this Government—or, rather, this Government when they were in coalition. The point is not to deny that transition needs to take place; the point is we have to do it in the right way, and I do not disagree with that.

I now wish to carry on making my case. If we support zero emissions globally—that is what the Secretary of State has done—the logical position is that we must also support it domestically. We set a target of an 80% reduction, but it does not make sense to have 80% as the target when we know from the science and from the global agreement that we will eventually have to get to zero emissions.

The second part of my case is based on economics, and I wish to make the following comments to Conservative Members in particular. They will worry that my proposal sounds as though it is going to raise costs, but quite the opposite is true. I ask them to listen to some of the business voices who are saying that they want us to set a clear target for zero emissions. Why are they saying this? It is because certainty is the friend of business in this area and uncertainty its enemy. Richard Branson has said that a net zero emissions goal simply makes “good business” as it

“will drive innovation, grow jobs, build prosperity”.

He is joined by many other business leaders in making that case. Just as it is the right thing to do for business, so, too, is it the right thing for government. We are

18 Jan 2016 : Column 1177

going to have to make decisions on infrastructure now which will have implications for 20, 30, 40 years hence. It is right to make those decisions on the basis of what we will eventually have to achieve, albeit in the second half of the century, because we know that we will have to get there.

Thirdly, and finally, my case goes beyond our borders. The Paris agreement is a great one, but its biggest weakness is that if we look at the aggregate of the different commitments made by different countries, we see that although the aspiration may be to limit warming to less than 1.5°, when we add them up they seem to be more like 3°-worth of commitments. Some might ask what difference the UK can make, as it represents only 1% of global emissions. They might ask why our acting has an impact. I say to the House that it does have an impact. The Climate Change Act—I give credit to the Conservative party because it supported this and actually pushed the then Government to do this—had an impact, not only in Britain but around the world. When the Secretary of State went to the Paris negotiations and urged others to take action, they were not able to say to her, “You are pretending you care about these things and want to legislate for them, but actually you are not taking action in your own domestic legislation.” We did do that.

David Mowatrose—

Edward Miliband:
I am not going to give way, because I would lose my time if I did so.

I say to the House, and to those who are sceptical about action having been taken, that the 2015 global climate legislation study looks at climate change legislation in 99 countries and talks about the speed of response following the UK’s Climate Change Act. My threefold case is that we need to have consistency between domestic and international action; that there is an economic case for doing this; and that we have an impact on other countries if we act.

I wish to deal with two other points that might be made to me about why my approach is a bad idea. The first is that we should stick to our existing targets and not worry about having more ambition. People might say, “Why do we need more ambition when we have this framework already in place?” By doing so, they are sticking their heads in the sand, because if we have to get to zero emissions, we should start that process now. It is a hard task, but it is a feasible one and we need to know that we should get there. My case is a pragmatic one. I am not saying, “Pluck out of the air a date on which to get to zero emissions.” I am not simply saying we should get there in 2050, as some business leaders have urged. I am saying that we should get the independent experts—the Committee on Climate Change—to look at these issues and advise government on when we should put this into UK domestic law.

The second point, which I think has been made in interventions, is that somehow we are going far too far ahead of other countries—that this is us being far too far out in front. The simple point to make about that is that more than 190 countries have now signed up to this zero emissions goal in the Paris agreement. Every country is theoretically signed up to this goal, so the question is: are we actually going to do it? Is this goal just warm words? Is this just us pretending that we are going to act but not really following it through?

18 Jan 2016 : Column 1178

In conclusion, I hope the Government will come forward with an amendment such as I have been outlining. If they do not, I want to work with people across this House to seek to make it happen. The Government can support this measure, so I hope they will come forward with an amendment, either in Committee or on Report. It would build on the momentum of the Paris agreement, it is in the best cross-party traditions of the Climate Change Act, and it would send a powerful signal around the world and in Britain about our determination to act. Above all, it would increase our ability to tackle dangerous climate change. Notwithstanding the contribution from the right hon. Member for Hitchin and Harpenden, this is something that unites the vast majority of Members across this House. I therefore hope the Government will give this suggestion the consideration it deserves.

6.16 pm

Graham Stuart (Beverley and Holderness) (Con):
It is a great pleasure to follow the right hon. Member for Doncaster North (Edward Miliband), my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) and other colleagues who have spoken today. I do not think any more memorable phrase will come into the debate than the “50 shades of green” used by my right hon. Friend. As so often in this area of debate, people dispute the numbers, as he did with his initial “ 40 shades” effort.

The thread of agreement among everyone who has spoken so far, including my hon. Friend the Member for Selby and Ainsty (Nigel Adams), my right hon. Friend and others, is that if we are setting out to fulfil the requirements of the Climate Change Act, we must do so in the lowest-cost way. My right hon. Friend was right to point out that, given the burden sharing throughout Europe, there is an issue about our taking further steps. Would that simply provide greater slack elsewhere? People may or may not share his scepticism about the whole arena, but none of us would want our making progress to mean that someone else slacks as a result. Therefore, having a joined-up approach is a sensible part of delivering what we all want and doing so at the lowest possible cost, and that is worthy of further investigation.

Where I do not think my right hon. Friend is right is in suggesting that this is purely an exercise in sadomasochism. After all, the Committee on Climate Change’s brief is to fulfil that which was passed in this House, albeit without his support: an 80% reduction in emissions by 2050. If we read the Committee’s fifth carbon report, which was recently published, we see that its whole premise is to try to work out a pathway to get us there at the lowest possible cost. That is one reason why I welcome the reset of the policy by the new Government and our new Ministers. They are not stepping away from the Climate Change Act, although some of my hon. Friends might wish that they were. On the contrary, they are saying that they want to look at how best to make sure we have a policy framework that incentivises activity to meet the outcomes that we all want.

I know from discussions with the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Northamptonshire (Andrea Leadsom), who is nodding in my direction, that one renewables issue we face—this picks up on the point made by my hon. Friend the Member for Selby and Ainsty—is

18 Jan 2016 : Column 1179

dealing with intermittency. One way of dealing with that is to develop storage. Have we had sufficient investment and created a framework that has incentivised enough focus on storage while we were also incentivising investment in things such as wind? The answer has to be no. We must therefore try to ensure that we get a framework that captures all the elements that we need in order to create a rational response, so that even if my right hon. Friend the Member for Hitchin and Harpenden does not entirely agree, he can see a more rational thread running through the policy in order that we can deliver.

The Secretary of State played a leading role in the negotiations in Paris, and Britain was at the table, helping to create a more ambitious deal.

David Mowat:
My hon. Friend mentioned Paris. I wish to understand, perhaps from the perspective of GLOBE—the Global Legislators Organisation—why the EU intended nationally determined contribution submitted at Paris implied a degree of reduction in emissions that is half the rate of the UK’s. Why has the EU decided not to follow us with the Climate Change Act, and apparently to be so tight around it? Does it know something that we do not?

Graham Stuart:
My hon. Friend often carries around with him the list of the emissions reductions of European countries since 1990. He points out—

David Mowat:
Austria.

Graham Stuart:
Indeed Austria is my hon. Friend’s favourite bête noire. He points out that the contribution of many countries that like to talk about this topic but not deliver on it is pretty woeful, which goes back to my earlier point about the need for a joined-up approach to ensure that we genuinely deliver collectively the outcomes that we desire. Thanks in part to the efforts of my right hon. Friend the Secretary of State, EU ambitions were raised, but they did not go as far as the UK would have liked. In 2008, with cross-party support, we unilaterally decided on a pathway for this country, which was 80% reductions by 2050.

Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con):
I agree with much of what my hon. Friend is saying, but does he also agree that where the UK leads, as was outlined by the former Leader of the Opposition, very often other countries in the EU follow? Currently, Sweden is considering implementing its own climate change Act based on UK legislation.

Graham Stuart:
My hon. Friend is right, but it is important not to exaggerate that, because it will quite rightly be picked up by colleagues, who will point out that something as all-encompassing, as specific and as road-mapped as our Climate Change Act has probably never been passed in another country in the world, and it is coming up for eight years since that Act was passed into law.

It is worth saying a little on the context, as we are seeing turning points. It is not correct to say that we are solely, in this sadomasochistic way, inflicting pain on ourselves while other entirely deny themselves these

18 Jan 2016 : Column 1180

pleasures. According to Bloomberg New Energy Finance, last year, despite the fall in oil and gas prices, there was record investment in clean power, with an increase to $329 billion. In other words, the regulatory and legal framework has been set up across the world, and the GLOBE organisation, of which I am chair and in which I declare an interest, has, I hope, played a part in helping to create those frameworks around the world.

Chinese renewables investment last year hit $111 billion, which was an increase of 17%, while the US investment in renewables went up 7.5% to $56 billion. However, to return to the point of my hon. Friend the Member for Warrington South, Europe saw the lowest level of investment in renewables last year since 2006. Therefore, while we may be delivering, Europe is not entirely doing what one might hope that it would.

On the subject of onshore wind, may I welcome the Government’s commitment to look at the whole system cost of renewables? My understanding is that onshore wind is currently our cheapest renewable, but there are issues around the back-up that is required. What we need to have is an objective assessment of the cost, so that we can make a proper judgment of the benefits of one form of clean energy versus another—for instance against biomass, which my hon. Friend the Member for Selby and Ainsty was so keen to champion. Until we have that clarity over the real costs, it is hard to create the framework and the incentives that we need to bring on the cleanest possible transformation at the lowest possible cost.

On the issue of zero emissions, I just wanted to follow on from what the right hon. Member for Doncaster North (Edward Miliband) said. He is right. If we are to deliver 2° let alone 1.5°, we will need to move to what sounds like a slightly fantastical idea of zero emissions. If we can entirely decarbonise the power system and then use that power in other systems, we will start to move towards the ability to eradicate most of our carbon. We still need other ways to change our systems—and we have time to develop these—so that any storage we have offsets the emissions that are not avoidable. There will always be emissions in a developed and industrialised world, but what we can do is net that to zero. It is important to make that point in case any people at home think that we are dealing in science fiction rather than reality. Given the progress in technology that we have seen over recent years, it is credible to believe that we can move to zero emissions. If, given modern science, 1.5° will be achieved, such a rate will be necessary.

The Government are doing a reset. By June this year, they will legislate on the fifth carbon budget, which covers the distant years of 2028 to 2032. By the end of the year, they will produce a strategy to deliver that, which is welcome. What we need is something much more coherent than the renewables obligation system. We need something that uses auctions, which delivers, as the Secretary of State has said, a market driving out costs in which the Government are out of the way to the maximum extent that they can be. In the meantime, why are we investing in expensive energies such as offshore wind? It is because they would not be viably invested in otherwise. None the less, that investment is driving the costs down. I say to those who are more sceptical on this matter to look at how prices have come down in solar and in onshore wind and how they are coming

18 Jan 2016 : Column 1181

down in offshore wind. Whatever the current eddies in investor confidence, going forward with these particular Ministers who are committed both to delivering our climate obligations and to doing so at the lowest cost and in the most coherent manner is exactly the right position for us be in. I am delighted to say that I will be supporting this Bill tonight.

6.26 pm

Julie Elliott (Sunderland Central) (Lab):
It is a pleasure to follow the hon. Member for Beverley and Holderness (Graham Stuart) who made a number of points with which I agree, and my right hon. Friend the Member for Doncaster North (Edward Miliband) who continues to make such a contribution to this debate. I also wish to place on record my thanks to the Secretary of State, who is no longer in her place, for the excellent job that she did in Paris—I am sure that those comments will be passed on to her—on behalf of us all. We are all delighted with the outcome of the Paris talks.

This is a wide-ranging Bill, but I wish to focus my short contribution on the renewables element, particularly the removal of the renewables obligation for onshore wind, and how that is impacting on investment in the north-east of England. I am fully aware of the Government’s concerns about the financial integrity of the levy control framework, and indeed I share those concerns. We need a fully funded, functioning levy control framework to fund clean energy developments. As the framework is funded by bill payers, it is absolutely crucial that we protect it and ensure value for money, but this Bill does not do that. The impact assessment demonstrates that, in the Government’s central scenario, this policy is projected to save bill payers 30p. In terms of the levy control framework, again in the Government’s central scenario, this policy is projected to save £20 million, out of a budget in 2021 of £7.9 billion. This measure does not appear to be protecting bill payers at all. Rather, it seems drafted for the purpose of appeasing climate change sceptics.

Last week, the Prime Minister reiterated his commitment to decarbonising at the lowest cost to the consumer, and for that he has my support, but his Secretary of State is going about things in an odd way. The Government remain committed to the EU renewable energy directive, for which the UK must source 20% of its energy needs from renewable sources by 2020. We also have a fixed budget for clean energy in the levy control framework. Will the Minister explain how, given a fixed renewables target and a fixed budget, replacing the cheapest renewable electricity technology, which is onshore wind, with more expensive technologies, such as offshore wind, can possibly lead to lower bills for consumers and maintain the financial integrity of the levy control framework?

In its July 2015 report, the Office for Budget Responsibility forecast a £1.6 billion overspend for the levy control framework in 2021, owing to higher take-up under feed-in tariffs and the RO, greater capacity from offshore wind, and lower wholesale electricity prices resulting from the lower than forecast gas prices and the freezing of the carbon price floor. No one is blaming the Government for not anticipating this remarkable fall in global energy prices, but in their efforts to restrain this potential overspend, the Government are doing serious damage to the UK’s clean energy future and to the investment we need to encourage in low-carbon generation.

18 Jan 2016 : Column 1182

Conor McGinn (St Helens North) (Lab):
The Bill cuts subsidies for onshore wind, but companies such as Solar King in my constituency will be hit by a double whammy, with cuts to the feed-in tariff and the proposal to increase VAT for residential solar. Does my hon. Friend agree that it is very difficult for any renewable energy business or investor to trust this Government, given their betrayal of the sector?

Julie Elliott:
I totally agree with that. The impact on the solar energy businesses in this country has been dramatic.

Let me give a specific example, which is relevant to my constituents in Sunderland and also speaks to the way in which this Government’s policies have suffocated the growth in clean energy generation and the jobs that go with it. Nissan in Sunderland recently wrote to the Secretary of State for Energy and Climate Change regarding a £3 million investment it wished to make in extending a wind farm on its site—a letter to which, I understand, Nissan has not yet received a reply. The aim of the project is to generate more, and cleaner, energy on site, so that less needs to be procured from outside. But the Government’s 18 June announcement on the renewables obligation and onshore wind has placed this development in serious jeopardy.

Under current proposals, Nissan’s investment will not go ahead because it had not secured planning permission or a grid connection agreement by the time of the announcement. Nissan has been working with the Department for Business, Innovation and Skills, and had an application for exceptional regional growth fund money accepted. However, a condition of this funding is that work cannot commence on a project, such as planning applications or grid connection negotiations, until the support application has been determined. In Nissan’s own words, it finds itself in a “Catch-22 position”—under the terms of the regional growth fund it is unable to seek the necessary approvals before the cut-off date, and the continuation of the exceptional regional growth fund programme was not confirmed until after the 2015 general election. The business case and regional growth fund application were based on eligibility under the renewables obligation. Without this, the development cannot go ahead.

My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), in whose constituency the Nissan plant is based, raised this matter at Prime Minister’s questions last week. The Prime Minister answered in general terms and did not address the specific point, yet this is the sort of project the Government should be encouraging, not suffocating. The fact that that project, which is on a brownfield site, for a major company that wants to reduce its carbon footprint, enhance the UK’s energy security and support an onshore wind industry that now employs 19,000 people may now not go ahead should be evidence of a policy that is not serving the best interests of this country. I ask the Secretary of State to engage with Nissan at the earliest possible opportunity, if she has not already done so, so that a sensible outcome can be achieved.

It is such confused and counterproductive policy making that many find so frustrating. The independent Committee on Climate Change has stated that the Government policy has created a “stop-start investment profile” which has hindered cost reduction and industry

18 Jan 2016 : Column 1183

development. This has been compounded by retrospective changes, like the one to the renewables obligation in this Bill. It therefore comes as no surprise that the UK has fallen down the global league tables for energy investment. EY’s respected global rankings show that under this Government, the UK has fallen from fourth in the world in November 2013, to 11th. EY singled out the UK Government for a lack of clarity and

What does that vacuum look like in real terms? It looks like cheap, clean onshore wind and solar subsidies being cut, while developers are being incentivised to install diesel generators, second only to coal in carbon intensity, on their sites. One thousand such generators have been installed in the past 18 months because current Government policy has led to such narrow margins this winter. This was not what energy policy should lead to in the second decade of the 21st century.

That vacuum looks like UK solar capacity falling 30% year on year in 2015 despite a global upward trend. It looks like clean energy developers losing their exemption from the climate change levy. It looks like the abolition of the zero carbon homes standard, and the green deal being axed due to uncompetitive high interest rates. It looks like mothballing carbon capture and storage in the UK, despite the knowledge of the fact CCS is not an option but a necessity for decarbonisation, particularly for energy-intensive industries. It looks like pernicious planning interventions, with claims that power is being devolved to local communities, followed, as we saw in the previous Parliament, by unprecedented intervention from Whitehall by the right hon. Member for Brentwood and Ongar (Sir Eric Pickles).

I hope the Secretary of State will look again at the proposal from Nissan, and at what it is doing more generally in relation to clean energy. No one has a monopoly on wisdom, but in the face of opposition from clean energy developers, with the Government’s own independent Committee on Climate Change detailing its fears, when global consultancies show the UK falling down the global league tables, and when the Government’s own impact assessment discredits their argument about money saving, perhaps it is time for them to reconsider some of their policies.

Several hon. Members rose—

Madam Deputy Speaker (Mrs Eleanor Laing):
Order. We have plenty of time for this debate but a very large number of Members wish to speak, so I am afraid I have to reduce the time limit to nine minutes.

6.36 pm

Julian Sturdy (York Outer) (Con):
It is a privilege to take part in this debate and follow so many incisive contributions.

I welcome this wide-ranging Bill, first, for the support it provides to our oil and gas industry, which is suffering greatly, as many have said, from the fall in global oil prices. As we have heard across the Chamber,

18 Jan 2016 : Column 1184

Members know well that the industry makes a substantial contribution to our energy security, employment and overall economic wellbeing, so the establishment of a new arm’s length body charged with regulating the sector is an important step in the right direction.

I shall focus my contribution on part 5 of the Bill, which will deliver on our manifesto commitment to end new public subsidies for onshore wind and give local communities the final say on planning applications. I speak as a Member who has joined many communities in my constituency fighting plans for entirely inappropriate wind turbines in Copmanthorpe, Wheldrake, Upper and Nether Poppleton, Murton and Kexby, to name but a few. Every single time it was the developers who were trying to impose their turbines on local communities, who simply did not want them. This was entirely unacceptable and I am pleased that every one of those applications was rejected by the local authority.

We need to end the current system whereby developers pocket the lucrative taxpayer-funded subsidies, and communities are stuck with turbines in their local neighbourhood and suffer the problems that accompany them. It is only right that local communities, not politicians in this Chamber, have the final say over whether planning permission for a new windfarm is granted. I am pleased that the Opposition Front-Bench team has accepted that. Only 18 months ago, the Labour-run council in York was proposing to encircle our great cathedral city with up to 40 wind turbines. Thankfully, the Labour council that instigated this insane project lost office in last year’s local elections. That was only to be expected, given that the common-sense wishes of local residents were completely ignored.

As my hon. Friend the Member for Selby and Ainsty (Nigel Adams) mentioned, any visitor to the picturesque countryside across north Yorkshire and the neighbouring east riding can appreciate that the area has taken more than its fair share of wind farms. The cruel irony is that ultimately they are being funded, at least in part, by the very local communities that are so deeply opposed to them. As such, I am delighted that the Secretary of State has grasped the nettle and pushed for the early closure of the renewables obligation scheme, an endeavour in which she has the full support of the overwhelming majority of my constituents.

It is a great shame that, when talking about energy, all too often we overlook the energy trilemma: the need to ensure that our energy is affordable, secure and environmentally friendly. All too often we focus on the final consideration—the need to decarbonise—when more needs to be done to push down the cost of household bills and increase capacity. Any Government who pay lip service to our future energy security are playing Russian roulette with our country’s future. We need a balanced energy mix to deliver that security, as Opposition Members have said. Without action, funds for otherwise uneconomic wind turbines are sadly draining resources away from other, less-intrusive forms of renewable energy that could play a key role in our future energy security.

Graham Stuart:
I certainly agree with my hon. Friend on the need to give communities the final say on any wind turbines in their area, but does he agree with me that we need to ensure that wind turbines that do have local support are in no way disadvantaged compared

18 Jan 2016 : Column 1185

with other forms of energy generation, for example if they need to get involved in the CfD mechanism? They must be on a par with other forms of generation, so long as the local community have a say on whether they are built?

Julian Sturdy:
I entirely agree with my hon. Friend; it is very important that this is community-led. There are places where there will be community support for onshore wind, and that must be seen through. I would go one step further—this is probably where I disagree with Ministers—because I think that the same should apply to fracking as well.

Offshore wind in the North sea has the potential to generate far more renewable energy than onshore wind farms, and in a way that does not harm our countryside. However, as the Secretary of State mentioned, further investment is needed in other exciting areas of renewable energy generation, so that we can decarbonise our energy network in a way that delivers lower bills and improves energy security. Tidal energy is one of the many types of renewable energy that are yet to be exploited on an industrial scale, as wind and solar energy have been in recent years.

Stephen Kinnock (Aberavon) (Lab):
I am very pleased to hear what I think is the hon. Gentleman’s support for tidal energy. Therefore, I seek his views on the fact that the Government seem to be continuously prevaricating over granting approval for the Swansea Bay tidal lagoon project in my constituency, which would generate huge amounts of clean energy and create thousands of jobs, including—consider the job losses that have been announced today—in the steel industry. Why, then, are they taking so long to give an answer on proposals made by the tidal lagoon team?

Julian Sturdy:
I thank the hon. Gentleman for his intervention. Perhaps the Minister will be able to answer that directly when she responds to the debate. In essence, I support the Swansea Bay scheme. I very much hope that the Energy and Climate Change Committee, of which I am a member, can visit the scheme and look at it in more detail. Sadly, the Chair of our Committee is not here, but a number of other members are. That is something that we should push for. It would be a groundbreaking move that could trail-blaze in other areas of tidal generation.

It is essential that taxpayer-funded subsidies accommodate bids from all sectors in the renewables industry so that we can support the green technologies of the future. I would welcome an assurance from the Minister that this will be a relevant consideration in the awarding of future support to the renewables industry. With the right framework in place, we could become a world leader in tidal energy, as I have mentioned, which would help us in our efforts to maintain a diverse energy mix and ensure security of supply.

Only by embracing the potential technological enhancements of today can we realise the bold commitments we made for tomorrow at the recent Paris summit. Ultimately, we need a more dynamic and secure energy mix that focuses on jobs, investment and local communities. The whole point of public subsidy is not to become dependent upon taxpayers’ money, but to help new industries stand on their own two feet. It is therefore only right that we now turn our attention to

18 Jan 2016 : Column 1186

supporting other potential forms of renewable energy that remain in their infancy and enforce our manifesto commitment accordingly.

It is essential that we listen to our constituents’ concerns about the relentless spread of onshore wind farms. Local people should always be at the heart of the decision-making process. It is therefore wrong that our manifesto commitment has so far been blocked in the other place by those who are unelected and, ultimately, are unaccountable to the people whom we in this Chamber serve. We must not shirk our responsibilities or go back on the commitments on which the Government were elected. Frankly, people are fed up with so many wind farms being built in their backyards, with their own hard-earned taxpayers’ money and without their say.

More must be done to support other forms of renewable energy that remain in their infancy. That is the only way in which we can have a broad-based renewables strategy while decarbonising our economy and ensuring an affordable and secure energy supply.

6.46 pm

Albert Owen (Ynys Môn) (Lab):
It is a pleasure to follow the hon. Member for York Outer (Julian Sturdy). I know his area well, and I agree with some of the things he said in his contribution. Few people would oppose a new regulatory body for our oil and gas industry in the North sea. One of my first jobs was on a tanker in the North sea, and I remember that the highly regulated Norwegian sector seemed to be growing in leaps and bounds, so I do not see regulation as a huge hindrance for the British sector. Similarly, nobody could disagree with maximising economic recovery, as the Government say they are doing through the Bill.

However, high energy prices are hurting our industry. Given the announcements we have heard today on the steel industry and the situation facing colleagues in Port Talbot, it is worth reflecting on some of the things that the Secretary of State said. She said that the Government were cutting back on the cost of energy. Actually, they are just fixing the mess they made in 2011, because it was this Government who brought in the carbon price floor that hampered many of our energy-intensive industries. That was an Osborne tax made by this Government, and it has caused the problems we see today. I do not want to dwell on that; I just want to see a little consistency from the Government and a clear path.

I represent a constituency that has plans for new nuclear and for a biomass plant and that has potential for tidal energy. Indeed, it has been dubbed the “energy island.” I believe that it is a microcosm for UK policy. However, we must have that energy mix if we are to have a sensible policy for the future. If businesses are to invest, we need the continuity and stability that they are crying out for. I have said on a number of occasions in this House that I am pro-nuclear, pro-renewables and pro-energy efficiency, and I see no contradiction in that, because in order to get the balance right we need the full suite of technologies available for the future.

I believe that the Government have missed many opportunities in this Bill. I will deal briefly with part 4. I agree that local communities should not be ridden over roughshod when it comes to planning applications by developers. I think that is sensible. However, I think that the Government have their sights on the wrong targets when they talk about reducing bills by cutting so-called

18 Jan 2016 : Column 1187

green taxes, because the biggest contribution to bills after oil and gas prices are transmission and distribution. There is nothing in this Bill, or in this Government’s energy policy, to deal with that. Twenty-five per cent. of household bills and business bills are for distribution and transmission costs, and yet—we hear talk about “the market delivering”—we have district monopolies in distribution and a national monopoly in transmission. National Grid does not act in the national interest: it acts in the interest of the shareholders of National Grid. That is wrong. In the previous Parliament, the Energy Act 2013 gave extra powers to National Grid by making it the systems operator so that it decides where new builds are going to happen and then provides the transmission in a non-competitive way. The Government need to look at that if they are serious about giving value to money to customers rather than fiddling around with the green areas that have been agreed just to get headlines in the Tory newspapers, as with onshore wind.

There was early onshore wind capacity in my area, but it has now grown to a stage where we need to build more. I agree with the Government on that. There used to be consensus on these policies. When my right hon. Friend the Member for Doncaster North (Edward Miliband) was Secretary of State, and then the coalition Government came in and Charles Hendry was Energy Minister, there was continuity on policies. That has been lost, and we now have a very piecemeal energy policy that many people believe—I think they are right to say this—has been driven by the Treasury. We have had the Osborne tax and the hands-on approach, and DECC officials and Ministers do not have the leeway to develop a coherent energy policy. This Bill was an opportunity for us to have a coherent energy policy on which to move forward.

I welcome the Government’s talk about nuclear new build, because my constituency will benefit from it. A fortnight ago, I went to the closure of Wylfa A in my constituency. Over 44 years of generation, high-quality jobs were provided. Few people in few industries could say that they have jobs for life, but nuclear provides that. We therefore need this long-term baseload, and I very much welcome it. The Wylfa Newydd—New Wylfa—project in my constituency started in 2007-08; it is taking a long time. That is why we need renewables facilities that can be built without these long lead times to provide the necessary balance. We need flexibility in generation because in a warm winter or a hot summer technologies have to be switched off. Onshore wind provides that flexibility in many ways, as does offshore wind. I saw that in operation when I was a member of the DECC Committee. We visited wind farms that are switched off in the summer so that essential maintenance can be done. A nuclear power station will not be switched off because it cannot be brought back on without adding extra costs. We need this flexibility, and this Bill does not in any way provide that.

The Government talk about honouring a commitment, but I am afraid they have form on that. When solar power was immediately switched off, just like that, there was a real impact on jobs in the creative industries as well as in the solar industry itself. We saw jobs lost in Wrexham and inward investment stop because of that

18 Jan 2016 : Column 1188

policy. Yes, we need to taper off solar, and the previous Labour Government had a policy to do that, but the manner in which this Government did it impacted negatively on business. I fear that the same thing will happen with wind power. Many of the companies that have invested in wind power have broad portfolios with not just wind power but gas and various other energy mixes, and they are worried about which sector is next. They want stability, and this Government are not providing it. The Bill is a missed opportunity. We need to get back to a coherent energy policy with a consensus whereby we plan for 30 to 40 years, not for five-year electoral cycles.

6.54 pm

Chris Heaton-Harris (Daventry) (Con):
It is a pleasure to follow the hon. Member for Ynys Môn (Albert Owen). I am not the expert that he is on these matters. I will focus on the bit of the Bill that is most controversial in this place—the removal of subsidies for the renewables obligation for onshore wind.

I will sketch out my own personal journey on this subject. I was a bit of a “greenie” when I was first elected to the European Parliament back in 1999, and I enjoyed working with the hon. Member for Brighton, Pavilion (Caroline Lucas) on certain things. It confused the hell out of her, but it did not do me any harm, and we actually had some interesting areas of agreement on policy. In 2001, though, I met a young gentleman called Bjørn Lomborg, and my journey to the light side has continued since then. Between then and 2010, I was interested in energy but did not really pay it much attention. As a Member of the European Parliament there are some big issues to talk about, but one does not look at individual policy areas in the way that one does when one becomes a constituency Member of Parliament representing, as I do, 72,500 people in the beautiful constituency of Daventry.

When I came here, I had one majorly controversial onshore wind farm development in my constituency, and I thought that I would do what everybody else in this place would do. I met the developer and representatives of the industry from the British Wind Energy Association, as it was then, to talk through the problems that my constituents had with their development. When that organisation later morphed into RenewableUK, I still spoke to it about how to include communities in decisions —how to incentivise them to take onshore wind in their area by working with them, perhaps even giving them some sort of rebate on their energy bills, so that they felt they were attached to local energy production for consumption in their areas. I have to say—and I am pretty sure that history will prove me right—that the wind industry decided to ignore all my counsel.

Bringing this forward to the present day, I suggest that how the onshore wind industry has treated communities up and down this country has done untold damage to how people see renewables in total as part of our energy provision. There is history to this that goes back further than the 2015 general election.

Graham Stuart:
I am not saying that there is not a moral responsibility on businesses, but they will usually act in the way that they are incentivised to act, and it is up to us to create frameworks that get them to behave in the right way. The previous Labour Government’s refusal

18 Jan 2016 : Column 1189

to listen on giving a voice to local communities meant that developers felt there was little point in engaging with and listening to the local community and just went to appeal to get the decision overturned. The then Government’s refusal to listen has led to hostility in many communities, including mine, towards the wind industry.

Chris Heaton-Harris:
I agree, mostly, with my hon. Friend. That is why I welcome the tone of the hon. Member for Wigan (Lisa Nandy) when she said that her party would now recognise the views of local communities on these matters and consider how they could be engaged.

I had to learn this for myself first hand with regard to an onshore wind development in the beautiful village of Kelmarsh—along the A14, just down from the M1 junction —where a number of 126.5-metre turbines are currently being erected. I thought, as my constituents did, that if we formed a good local campaign with everything going for us, we could win the campaign and stop a proposed development being established on what was, in most people’s judgment, an inappropriate site—a grade 1 listed site. That view was borne out by the planning inspector. Because the local council did the right thing and turned the application down, the developer appealed. The gentleman from the planning inspectorate in Bristol came to visit and made a stunning, groundbreaking statement that changed how I dealt with these issues and culminated in the pledge on onshore wind that I am so proud of in the Conservative party manifesto that saw us into government.

The planning inspector said all the things that the local community had been saying about the development being on an inappropriate site and about it being damaging to local communities, and gave a whole host of reasons why he should not approve it, but he then went on to say that national policy trumped all this, and therefore, “You are having this onshore wind development no matter what you would like.”

Albert Owen:
Does the hon. Gentleman agree that the same logic should apply—local authorities and local communities should have a greater say—when National Grid comes up with a plan to connect a new generation of pylons to the grid? Does he agree that the Government should devolve that responsibility to local authorities?

Chris Heaton-Harris:
I would not go quite that far, because I do not know the context in which the hon. Gentleman phrases his question. However, I would always argue in favour of local communities having way more say in developments. In fact, we should go even further and take the same approach as the French, whereby local communities are massively incentivised to get involved in taking on developments that are deemed unpopular elsewhere. Indeed, they choose to get involved: they have local campaigns for what would be very unpopular planning decisions in the United Kingdom, because they understand that they will be to their benefit.

I decided that I had to do my bit to try to change national policy, so I walked around the Lobbies of this place and found 100 other Members who felt similarly aggrieved about the way in which planning and onshore wind had been developed. I got them to sign a letter to the Prime Minister on how we should change things. I also noticed that, in 2011-12, we were already hitting

18 Jan 2016 : Column 1190

our 2020 targets for onshore wind development capacity. Logic would suggest, therefore, that the subsidy we were giving to onshore wind was too high. The number of developments was such that we were going to shoot past the target without any trouble whatsoever.

The subsidy was too high and local people felt that they were being ignored. I would also argue that wind farms produce expensive energy, which puts people into fuel poverty and has contributed to energy prices going skyward at a time when the cost of energy is beginning to fall. We can never forget fuel poverty or the fact that our industry needs cheap energy to compete internationally, but let us put those points to one side for a moment. If we make an argument to local people about the need for an onshore wind development on their patch when they know that the targets have been hit, that they will pay extra through their bills for the privilege, that they will not get anything from it and that developers are rubbing their noses in it, we end up with a bunch of very angry people whose idea of what democracy should look and feel like is disturbed to the greatest extent possible.

Over time, I was delighted to be able to persuade, cajole, elbow, nudge and force my own political party into changing our planning guidance. However, that did not have too much of an effect until—as the hon. Member for Sunderland Central (Julie Elliott), who is not in her place, said—the former Secretary of State for Communities and Local Government reminded the planning authorities of exactly what he meant in his policy statements by calling in a number of developments at appeal stage and making the rulings himself.

We then went further and said in our manifesto that we would cut new subsidies for onshore wind, but that was not good enough for me: I had had enough of these people and how they dealt with my constituents, so I wanted to deal with them retrospectively. In the energy chapter of the manifesto, it was generous of the Prime Minister to take on my well-registered and well-documented concerns and my ideas about how we should progress, and to state that there would be no new subsidies for onshore wind.

Anybody who drives up the M1 and comes to the gateway to my constituency, where the M1 meets the M6 and the A14, will see 126.5-metre-high turbines—I think we are going to get 102 of them—in a very small radius. My constituents are annoyed by the noise and worried about health concerns. They cannot sell their houses as quickly as they would like and there are all sorts of other problems, but they want to know that that will not happen to other people locally and nationally. I was therefore proud to sell that part of the Conservative party manifesto in the 2015 general election campaign.

There were some who tried to argue that that was not what the Conservative party meant in its manifesto and that we were saying something completely different—that we were talking not about existing wind subsidy or the renewables obligation, but about new subsidy. Those people were dancing on the head of a pin and that only upsets people in my constituency and, indeed, everywhere else, because it feeds the perception that politicians do not tell the truth or deliver manifesto commitments. Opposition parties would do a lot better than to argue against individual elements, because the language we used was absolutely black and white and it was sold to everybody as such.

18 Jan 2016 : Column 1191

Matthew Pennycook (Greenwich and Woolwich) (Lab):
I do not want to cut off the hon. Gentleman as he comes to a conclusion, but if it was so patently obvious to everyone that that was the precise meaning of the manifesto commitment, why was industry taken by surprise?

Chris Heaton-Harris:
Industry was certainly not taken by surprise—absolutely not. It knew exactly what was coming its way. I think the hon. Gentleman will find that that is why it campaigned so aggressively with his party. I am afraid I have to stop there, but I want to send a message to those at the other end of the corridor that they should watch and learn about democracy before they start impinging on decisions we put in our manifesto.

7.6 pm

Matthew Pennycook (Greenwich and Woolwich) (Lab):
It is a pleasure to take part in this debate and to follow some very thoughtful contributions. I would like to single out those of the hon. Member for Beverley and Holderness (Graham Stuart), the right hon. Member for Hitchin and Harpenden (Mr Lilley) and my right hon. Friend the Member for Doncaster North (Edward Miliband). As Members might expect, I did not agree with everything they said, but they were none the less serious and thoughtful contributions.

When this Bill first came before peers in the other place, it was a rather meagre piece of proposed legislation that focused almost entirely on fossil fuel extraction. It was amended considerably in Committee and, although it is still pretty thin gruel in many respects, at least it now has some regard to the ways in which current industrial activities and investment might be made compatible with a low-carbon energy future.

As has been said, the Bill is mostly concerned with the establishment of the Oil and Gas Authority. How that arrangement adapts to a world of plunging revenues from offshore oil and gas remains to be seen, but there is broad consensus in the House, with notable exceptions, on the need to implement the findings of the Wood review. There is also a robust case, in terms of economics and energy security, for using the resources of the North sea continental shelf to reduce our dependence on foreign imports during the transition to a decarbonised energy system.

It was disappointing that the Secretary of State dug in her heels with regard to carbon capture and storage, because I welcome the amendments that would expand the principle objective of the UK’s maximising economic recovery strategy to incorporate a regard for CCS development. The precise wording of the relevant clauses will need to be revisited in Committee to ensure that the industry has the necessary flexibility and that jobs and investment are protected, but CCS presents a real opportunity for the North sea oil and gas industry to utilise its technical expertise and skills in a way that will give it a sustainable future for decades to come. That opportunity will not be realised, however, unless we get clarity about the Government’s ambitions for CCS and a strategy to achieve those ambitions. At the moment, all we have is muddle.

In 2007, the Prime Minister said in a speech at Chongqing University that a Conservative Government would

“strain every sinew to create viable and affordable”

CCS technology, yet eight years on we have a Conservative Chancellor recklessly cutting the funding allocated to help bring forward commercial-scale CCS just weeks

18 Jan 2016 : Column 1192

before many companies were expected to submit their bids. The abrupt end to funding support for CCS is not an aberration, but is indicative of this Government’s cavalier approach to the energy sector as a whole. That approach was evident in the most controversial aspect of the Bill that originally came before noble Lords in the other place, namely the decision to close the renewables obligation a year earlier than had originally been legislated for in the Energy Act 2013.

I agree with the point, which many hon. Members have made, about the need for local consent when it comes to onshore wind, but noble Lords removed clause 66 on Report, through an Opposition amendment, and they were right to do so, because the early closure of the RO was yet another example of policy making on the hoof from the Government. The measure’s stated objective was to save customers money, but, as we have heard, in the Government’s own central scenario, in many cases that will mean as little as 30p, and we know that the cost savings are unlikely to materialise, because we are not on course to meet our EU renewables target.

Given the notable lack of progress in decarbonising heat and transport, and of meaningful cross-departmental working to make up lost ground, we will be forced to go further, under the current targets, on renewable electricity. In those circumstances, it is entirely counterproductive to make life more difficult for the cheapest form of renewable energy available. It strikes me that the decision has much more to do with the politics of appeasing Conservative Back Benchers and with the Government’s interpretation of the levy control framework as a fixed-budget envelope—it was never intended to operate in that way. The decision clearly signals that the Government have abandoned their previous commitment to a technology-neutral approach to energy policy at a time when the overriding priority, as hon. Members have said, must be decarbonising at the lowest possible cost.

Despite the nebulous wording of the Government’s manifesto commitment, they clearly feel they have a mandate to reinsert clause 66, or a version of it, in Committee. If they do, as the Minister said they would, I would urge them to reconsider the impact of the RO’s closure on projects that have local consent and in which people have invested in good faith and on smaller generators and to work to incorporate truly equitable grace periods into the Bill.

Graham Stuart:
The hon. Gentleman said that the saving would be very small, but the number of turbines affected would also be extraordinarily small, would it not? Should we not keep this in perspective?

Matthew Pennycook:
It might be small, but I hope the hon. Gentleman would agree that projects in which people have invested in good faith and which have local consent should be allowed to proceed, instead of being penalised by the early closure of a scheme that had a fixed end point—2017—in legislation anyway.

The way the Government have handled the matter of the RO has been hugely damaging and undermined the industry’s trust in the Government’s word. Last January, the industry was told that its investments were safe and that no changes to the rules were proposed, but six months later, despite there being no clear signal in the Conservative manifesto, the Government attempted to do just that.

18 Jan 2016 : Column 1193

Chris Heaton-Harris:
I understand the hon. Gentleman’s point entirely, but I have just read a press release, dated 29 April 2015, from RenewableUK, that reads: